Construction projects likely to come to halt during shutdown

Thousands of state employees and private sector businesses are scrambling to gauge the impact of a possible government shutdown, which is only nine days away. One area that will surely be hard hit is the already struggling construction sector.

Gov. Mark Dayton and the Republican controlled Legislature didn't agree on much this year, but they did find common ground on the need for jobs and efforts to spur economic development. As a state shutdown looms however, the failure to reach a budget deal will do damage to both of those goals.

The state sent layoff notices to 36,000 state employees earlier this month. Without some of those workers, construction all across Minnesota will come to a halt. That will include road construction, commercial development and housing developments.

Minnesota Department of Transportation spokesman Kevin Gutknecht said a shutdown will mean MnDOT employees won't be on the job to monitor road construction.

“Contractors and suppliers and everyone is angry. Everyone we talked to is angry.”

Glen Johnson, International Union of Operating Engineers

"MnDOT employees are necessary when we're working on road projects because they conduct physical inspections on the site of the work that's being done to ensure that's its meeting specifications," Gutknecht said.

And without those state workers, contractors are unlikely to keep working on highway construction projects. If a shutdown occurs, more than 100 active highway construction projects would be mothballed and hundreds of construction workers would be out of work. Glen Johnson with the International Union of Operating Engineers said his members are frustrated that they're caught in the middle of a budget battle.

"I would say the anger is very widespread," Johnson said. "Contractors and suppliers and everyone is angry. Everyone we talked to is angry and saying 'five months of work and no compromise on getting a budget deal done.'"

Johnson said he's encouraging his members to make sure they can apply for unemployment after July 1. He said some members may need to quit the job a day early if a Ramsey County judge doesn't allow for unemployment applications to be processed during a shutdown.

Construction businesses are also watching carefully and the Association of General Contractors held a shutdown meeting this week to discuss the impact of a shutdown. Some firms are also sending letters to MnDOT telling them the shutdown will force layoffs and cost the firms money.

Bob Beckel, with the construction company Edward and Kraemer and sons, said that stopping and restarting the 494/169 project could cost as much as $400,000. Rebuilding the interchange is a $125 million dollar, two-year project that got underway this spring after a multi-year delay.

Tim Worke, with the Association of General Contractors, told MPR News last week that shutting down road projects can be complicated and expensive. He said there has to be a sequence of procedures in place that would begin a couple of days in advance of that time.

"Preparations would need to be made in order to secure the job site, make it safe for the travelling public and put a traffic management plan in place for the travelling public," Worke said.

A shutdown will also have an impact on private sector construction. The state handles building inspections where there are no local building officials and that would stop if the government shuts down.

Minnesota Pollution Control Agency Deputy Commissioner John Stine said contractors need storm water permits from the state to ensure erosion is controlled. The state is expected to issue about 80 permits a week during peak construction season.

Stine said contractors who have an existing permit can continue work on private projects but would have to be careful to meet the requirements in the permit. He said they usually contact his agency if they deviate a little bit from their plans and won't have that option if government shuts down.

"If I were the contractor, I'd say 'OK, now I can't get an answer to that question, so my ability to proceed is limited by that," Stine said. "They're proceeding at their own risk if they were to proceed and I think most contractors would be more cautious than that."

Republican lawmakers have encouraged the governor to call a special session so they can pass a transportation funding bill and keep some of the projects running. But Dayton said he won't call a special session until a full budget deal is reached.